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The idea is to show Americans just how abysmal is the state of their country's finances. But the new Sovereign Fiscal Responsibility Index, developed by graduate students at Stanford University and former U.S. comptroller of the currency David Walker, suggests Canada isn't quite the bastion of fiscal management that its leaders describe.

Reporters and analysts have eased up calling fiscally desperate Portugal, Ireland, Italy, Greece and Spain by their porcine acronym. That's for the best, because based on the fiscal responsibiliy index, they'd have to figure out a clever way of adding the U.S. to the mix. The United States ranks 28th on a list of 34 major economies, ahead of Hungary, Ireland, Japan, Iceland, Portugal, and Greece. Italy ranks just ahead of the U.S. and Spain comes in at No. 23.

"Were people shocked that Mexico ranked 10 spots ahead of the U.S.?," Mr. Walker asked at the end of press conference Thursday in Washington.

A question for Canadians: are you shocked that Canada, the country where fiscal cushions inspire heated debate in the House of Commons, sits outside the Top 10?

Canada ranks 11th in the index. Australia, New Zealand and Estonia are respectively first, second and third. Besides Australia, fellow Group of 20 countries China, Britain and Brazil rank ahead of Canada.

The
index is based on three categories: fiscal space, which is the difference between the amount of debt a country can handle and the amount of debt currently on the books; fiscal path, or the projected number of years it would take a country to breech its assumed debt ceiling; and fiscal governance, which is a subjective assessment of a country's commitment to sound fiscal management.

Canada's score on "fiscal path" is strong: the index shows it would take 39 years for Canada to reach a level of debt that the authors estimate would push the country into default. That compares with 16 years for the U.S., seven years for Italy and five years for Japan. Australia and seven other nations have a fiscal path of more than 40 years.

The creators of the index included sub-national debt in their scoring, a burden that federal politicians tend to exclude when they extol the strength of Canada's finances. Alexander Maasry, one of the four-member Stanford team that designed the index, said they included state and municipal debt to make for fair comparisons -- some countries issue only national debt -- and because the federal authority would be under heavy pressure to bail out any state pushed to the brink. This hurts Canada's ranking because the provinces, which must pay for rising health costs, are under considerable fiscal pressure coming out of the recession. Canada's fiscal space is 106 per of gross domestic product, 14th overall. By comparison, China's is 193.3 per cent of GDP, Australia's is 168.2 per cent of GDP, the U.S.'s is 62.4 per cent, and Italy's is 17.8 per cent.

Where Canada seriously falls down is fiscal governance -- the country doesn't even make the top half. This is the most subjective component of the index. For example, the authors give a high score to countries with fiscal targets in the constitution, and a low score to those where politicians simply promise to be prudent. Perhaps because fiscal prudence has become the norm in Canada's political culture, governments mostly have refrained from making prudence the law. For the purposes of the sovereign fiscal responsibilty index, that counts against Canada.

Of course, the point of the index is not to shame Canada, or for that matter, praise Australia. Mr. Walker in recent years has made a mission of alerting Americans to what he sees as a desperate situation of which all should be afraid. The index is his latest attempt at focusing the mind.

A ranking "plays to the competitive spirit of Americans," Mr. Walker said. "Americans aren't used to seeing their country ranked so low."

Canadians, however, might be getting used to
middling scores. The middle certainly is better than the bottom. But more and more evidence suggests its time for Canada's economic leaders to stop pretending the country is at the top.

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